[Federal Register Volume 89, Number 1 (Tuesday, January 2, 2024)]
[Rules and Regulations]
[Pages 5-14]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27906]


=======================================================================
-----------------------------------------------------------------------

FEDERAL ELECTION COMMISSION

11 CFR Part 113

[Notice 2023-19]


Candidate Salaries

AGENCY: Federal Election Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Commission is revising its regulations concerning the use 
of campaign funds by a candidate's principal campaign committee to pay 
compensation to the candidate. The Commission is issuing these rules in 
response to a Petition for Rulemaking filed by a former candidate for 
the United States House of Representatives.

DATES: The effective date is March 1, 2024.

FOR FURTHER INFORMATION CONTACT: Amy L. Rothstein, Assistant General 
Counsel for Policy, Joseph P. Wenzinger, Attorney, or Cheryl A.

[[Page 6]]

Hemsley, Attorney, 1050 First Street NE, Washington, DC 20463, (202) 
694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: The Commission is revising its regulations 
at 11 CFR part 113 concerning the use of campaign funds by a 
candidate's principal campaign committee to pay compensation to the 
candidate. Specifically, the Commission is revising the criteria for 
determining whether a candidate is eligible to receive compensation 
from campaign funds, the maximum amount of compensation that a 
candidate may receive from campaign funds, and the period during which 
a candidate may receive compensation from campaign funds. The 
Commission is also making miscellaneous changes to its regulations on 
candidate compensation for purposes of continuity, clarity, and 
administration. The Commission is not, at this time, addressing the use 
of campaign funds to pay a candidate's health insurance premiums and 
dependent care costs. The Commission's advisory opinions addressing the 
use of campaign funds to pay a candidate's dependent care costs remain 
in effect. Members of the public may also submit requests for 
additional advisory opinions on those subjects.

Transmitting Final Rules to Congress

    Before promulgating rules or regulations to carry out the 
provisions of the Federal Election Campaign Act of 1971, as amended 
(the ``Act''),\1\ the Commission transmits the rules or regulations to 
the Speaker of the House of Representatives and the President of the 
Senate for a thirty-legislative-day review period.\2\ The effective 
date of this final rule is March 1, 2024.
---------------------------------------------------------------------------

    \1\ 52 U.S.C. 30101-45.
    \2\ Id. 30111(d).
---------------------------------------------------------------------------

I. Background

    The Act prohibits a candidate's authorized committee from 
converting campaign funds to ``personal use.'' \3\ ``Personal use'' is 
defined as the use of campaign funds ``to fulfill any commitment, 
obligation, or expense of a person that would exist irrespective of the 
candidate's election campaign or individual's duties as a holder of 
Federal office.'' \4\ The Act and Commission regulations provide a non-
exhaustive list of expenses that, when paid using campaign funds, 
constitute per se conversion of those funds to personal use.\5\ The 
Commission determines on a case-by-case basis whether the use of 
campaign funds to pay expenses other than those listed would be a 
prohibited conversion of the funds to personal use.\6\
---------------------------------------------------------------------------

    \3\ Id. 30114(b).
    \4\ Id. 30114(b)(2); see also 11 CFR 113.1(g) (defining 
``personal use'').
    \5\ See 52 U.S.C. 30114(b)(2); 11 CFR 113.1(g)(1)(i).
    \6\ See 11 CFR 113.1(g)(1)(ii) (providing non-exhaustive list of 
expenses to be determined for personal use on a case-by-case basis).
---------------------------------------------------------------------------

A. Candidates' Salaries

    The Act does not identify the use of campaign funds to pay 
candidate salaries as per se personal use. In Advisory Opinion 1999-01 
(Greene), however, the Commission concluded that the Act would prohibit 
a federal candidate from using campaign funds to pay himself a salary 
because the candidate would indirectly use the funds to pay his 
mortgage, utilities, groceries, and clothing--all of which are per se 
personal use.\7\
---------------------------------------------------------------------------

    \7\ Advisory Opinion 1999-01 (Greene) at 4.
---------------------------------------------------------------------------

    In 2002, the Commission proposed to codify this conclusion in a 
regulation.\8\ The proposed regulation would have prohibited candidates 
``from using campaign funds to pay themselves salaries or otherwise 
compensate themselves in any way for income lost as a result of 
campaigning for Federal office.'' \9\ The Commission received several 
public comments opposing this proposal, and no public comments 
supporting it. Comments argued that the use of campaign funds to pay 
candidates' salaries would not fulfill a commitment, obligation, or 
expense that would exist irrespective of the campaign, and therefore 
satisfies the Act's ``irrespective'' test because, ``were it not for 
their campaign responsibilities, candidates would not have to leave 
their jobs and give up their salaries.'' \10\
---------------------------------------------------------------------------

    \8\ Disclaimers, Fraudulent Solicitation, Civil Penalties, and 
Personal Use of Campaign Funds (``2002 Proposed Rule''), 67 FR 55348 
(Aug. 29, 2002), https://www.govinfo.gov/content/pkg/FR-2002-08-29/pdf/02-21893.pdf.
    \9\ Id. at 55353.
    \10\ Disclaimers, Fraudulent Solicitation, Civil Penalties, and 
Personal Use of Campaign Funds (``2002 Final Rule''), 67 FR 76962, 
76971 (Dec. 13, 2002), https://sers.fec.gov/fosers/
showpdf.htm?docid=8982#page=10.
---------------------------------------------------------------------------

    The Commission ``agree[d] with the commenters that the payment of a 
salary to a candidate is not a prohibited personal use as defined under 
Commission regulations.'' \11\ The Commission explained that this use 
of campaign funds satisfied the ``irrespective'' test because, ``but 
for the candidacy, the candidate would be paid a salary in exchange for 
services rendered to an employer.'' \12\ Moreover, the Commission 
stated, a ``salary paid to a candidate would be in return for the 
candidate's services provided to the campaign and the necessity of that 
salary would not exist irrespective of the candidacy.'' \13\
---------------------------------------------------------------------------

    \11\ Id.
    \12\ Id.
    \13\ Id.
---------------------------------------------------------------------------

    The Commission included in the final regulation various safeguards 
against abuse. To be a permissible use of campaign funds, the salary 
paid to a candidate must not exceed the lesser of the minimum salary 
paid to a ``Federal officeholder holding the Federal office that the 
candidate seeks'' or the earned income received by the candidate the 
year before becoming a candidate.\14\ Further, any earned income that a 
candidate receives from salary or wages from any source other than 
campaign funds counts against the minimum salary paid to a federal 
officeholder as described in the regulation.\15\ In addition, 
candidates must provide income tax records for the relevant years and 
other evidence of earned income upon the Commission's request.\16\ The 
regulation also provides that campaign funds cannot be used to pay a 
candidate's salary before the filing deadline for access to the primary 
election ballot for the federal office that the candidate seeks, as 
determined by state law, or January 1 of each even-numbered year in 
states that do not conduct primaries.\17\ Finally, the regulation 
requires salary payments to be computed on a pro-rata basis and 
prohibits candidates who are also federal officeholders from receiving 
salary payments from campaign funds.\18\
---------------------------------------------------------------------------

    \14\ 11 CFR 113.1(g)(1)(i)(I).
    \15\ Id.
    \16\ Id.
    \17\ Id. Under this regulation, if the candidate wins the 
primary election, his or her principal campaign committee may pay 
him or her a salary from campaign funds through the date of the 
general election, up to and including the date of any general 
election runoff. If the candidate loses the primary, withdraws from 
the race, or otherwise ceases to be a candidate, no salary payments 
may be paid beyond the date he or she is no longer a candidate. In 
odd-numbered years in which a special election for a federal office 
occurs, the principal campaign committee for that office may pay the 
candidate a salary from campaign funds starting on the date the 
special election is set and ending on the day of the special 
election.
    \18\ Id.
---------------------------------------------------------------------------

B. Candidates' Childcare Expenses

    The Act and Commission regulations do not include the use of 
campaign funds to pay candidates' childcare expenses as a per se 
personal use. The Commission has addressed this use of campaign funds 
in several advisory opinions, and has approved the use of campaign 
funds to pay candidates' overnight childcare expenses incurred when the 
candidates travel for their own

[[Page 7]]

campaigns,\19\ and to pay caregiver expenses and full-time daycare when 
candidates' campaign responsibilities and activities prevented them 
from caring for their children themselves.\20\ In each of these 
advisory opinions, the Commission concluded that the candidate could 
use campaign funds to pay the candidate's childcare expenses to the 
extent that the expenses were a ``direct result of campaign activity,'' 
because such expenses would not have existed irrespective of the 
candidate's campaign.\21\
---------------------------------------------------------------------------

    \19\ Advisory Opinion 2022-07 (Swalwell); Advisory Opinion 1995-
42 (McCrery).
    \20\ Advisory Opinion 2018-06 (Liuba for Congress); Advisory 
Opinion 2019-13 (MJ for Texas).
    \21\ Advisory Opinion 2022-07 (Swalwell) at 3-4; Advisory 
Opinion 2019-13 (MJ for Texas) at 3; Advisory Opinion 2018-07 (Liuba 
for Congress) at 3; Advisory Opinion 1995-42 (McCrery) at 2; c.f. 
Advisory Opinion 2005-09 (Dodd) at 3 (approving proposed use of 
campaign funds to pay travel expenses for candidate's children to 
accompany their parents ``provided that the parents are traveling to 
participate in a function directly connected to the Senator's bona 
fide official responsibilities''); Advisory Opinion 1995-20 (Roemer) 
at 2 (approving proposed use of campaign funds to pay travel 
expenses of candidate's young children when they travel with 
candidate and his wife for campaign events, where such travel is 
``only required because of the campaign'').
---------------------------------------------------------------------------

C. Candidates' Medical Insurance Premiums

    The Act and Commission regulations do not include the use of 
campaign funds to pay candidates' medical insurance premiums as a per 
se personal use, and the Commission has not addressed this issue in 
advisory opinions.\22\ The Commission has, however, addressed the use 
of campaign funds to pay health insurance premiums in an enforcement 
matter. In MUR 7068 (Mowrer for Iowa), the Commission found reason to 
believe that a congressional candidate and his campaign committee had 
improperly converted campaign funds to personal use by using funds from 
the candidate's principal campaign committee to reimburse the candidate 
for payment of his health insurance premiums.
---------------------------------------------------------------------------

    \22\ The petitioner had previously requested an advisory opinion 
to clarify whether a candidate's health insurance premiums were a 
permissible campaign expense, see Advisory Opinion Request 2020-01 
(Nabilah for Georgia), but her request became moot when she stopped 
being a candidate.
---------------------------------------------------------------------------

D. Petition for Rulemaking

    On March 23, 2021, the Commission received a Petition for 
Rulemaking from Ms. Nabilah Islam, a former candidate for the United 
States House of Representatives in Georgia.\23\ The Petition asked the 
Commission to amend Section 113.1(g) of its regulations to expand the 
category of candidates eligible to receive compensation from their 
authorized committees and the duration of their eligibility, and to 
authorize the use of campaign funds to pay candidates' health insurance 
premiums.\24\
---------------------------------------------------------------------------

    \23\ Petition for Rulemaking to Improve Candidate Salary Rules 
(``Petition'') (Mar. 23, 2021), https://sers.fec.//
showpdf.htm?docid=413694.
    \24\ Id. at 4-5.
---------------------------------------------------------------------------

    The Petition asserted that ballot access deadlines for state 
primaries, which ``vary wildly based on state law,'' \25\ leave many 
candidates with short periods for receiving a salary under the 
Commission's regulation.\26\ Moreover, the Petition alleged that the 
current maximum salary limitation ``leaves candidates who are full time 
caretakers or who have had gaps in employment out in the cold,'' \27\ 
and that rising health insurance costs act as a barrier to the 
prospective candidacies of ``working class people.'' \28\
---------------------------------------------------------------------------

    \25\ Id. at 3-4.
    \26\ Id. at 4 (noting, for example, that in Pennsylvania in 
2018, Congressional candidates were eligible to receive a salary for 
only 56 days).
    \27\ Id. at 4-5.
    \28\ Id. at 5.
---------------------------------------------------------------------------

    The Petition asked the Commission to ``lower the barriers for 
working Americans to run for Federal office'' by amending its personal 
use regulations at 11 CFR 113.1(g) to:
    (1) Extend the date on which a candidate may begin drawing a 
campaign salary to at least 180 days before the primary election; \29\
---------------------------------------------------------------------------

    \29\ Id. at 4, 6.
---------------------------------------------------------------------------

    (2) Establish a minimum candidate salary of no less than the 
annualized salary of $15 per hour; \30\ and
---------------------------------------------------------------------------

    \30\ Id. at 4-5.
---------------------------------------------------------------------------

    (3) Expressly permit a candidate to use campaign funds to pay the 
costs of any health benefit plan already provided to other campaign 
employees beginning on the date the candidate is eligible to receive a 
campaign salary.\31\
---------------------------------------------------------------------------

    \31\ Id. at 5.
---------------------------------------------------------------------------

E. Public Comments on the Petition

    On May 23, 2021, the Commission published a Notification of 
Availability (``NOA'') seeking public comment on the Petition.\32\ The 
Commission received 22 comments in response, 14 of which supported 
initiating a rulemaking, agreeing generally that the Petition's 
proposals would make it easier for individuals of modest means who are 
not already federal officeholders to run for federal office.\33\ 
Several comments noted that the current candidate salary regulation 
offers little assistance to full-time caregivers or those who have 
experienced a recent financial hardship because candidate salaries 
cannot currently exceed the amount of income earned in the year before 
their candidacy. Comments also indicated that the period during which a 
candidate is eligible to receive a salary is too short and does not 
reflect the financial costs and other demands of campaigning today. 
These comments generally agreed that a candidate's campaign committee 
should be able to use campaign funds to pay the candidate's health 
insurance premiums. Five comments opposed initiating a rulemaking.
---------------------------------------------------------------------------

    \32\ Rulemaking Petition: Candidate Salaries, Notification of 
Availability (``NOA''), 86 FR 23300 (May 3, 2021), https://sers.fec.gov/fosers/showpdf.htm?docid=413869.
    \33\ The comments are available on the Commission's website at 
https://sers.fec.gov/fosers/, referencing REG 2021-01 (Candidate 
Salaries).
---------------------------------------------------------------------------

F. Notice of Proposed Rulemaking

    On December 12, 2022, the Commission published a Notice of Proposed 
Rulemaking (``NPRM'') in the Federal Register, proposing to amend its 
regulations regarding the use of campaign funds to pay candidates' 
compensation, including salaries, health insurance premiums, and 
dependent care costs.\34\
---------------------------------------------------------------------------

    \34\ Candidate Salaries, Notice of Proposed Rulemaking 
(``NPRM''), 87 FR 75945 (Dec. 12, 2022), https://sers.fec.gov/
fosers/showpdf.htm?docid=421006.
---------------------------------------------------------------------------

    In the NPRM, the Commission proposed several changes to its 
personal use regulations, including a reorganization of the 
Commission's current regulations at 11 CFR 113.1(g)(1) through (8) 
addressing personal use, and the candidate salary regulation at 11 CFR 
113.1(g)(1)(i)(I). The Commission proposed to remove, reserve, and 
redesignate several paragraphs \35\ and add new paragraph (g)(6) to 
address candidate compensation.
---------------------------------------------------------------------------

    \35\ The Commission proposed to remove and reserve 11 CFR 
113.1(g)(1)(i)(I) and redesignate current paragraphs (g)(6), (g)(7), 
and (g)(8) as (g)(7), (g)(8), and (g)(9), respectively.
---------------------------------------------------------------------------

    The Commission proposed the new paragraph 11 CFR 113.1(g)(6) to 
have seven subparagraphs as follows, each of which is explained further 
below:
    <bullet> New 11 CFR 113.1(g)(6)(i), to prohibit federal 
officeholders from receiving compensation as candidates from campaign 
funds. This prohibition already appears in the Commission's 
regulation.\36\ The Commission is adopting this proposal.
---------------------------------------------------------------------------

    \36\ See 11 CFR 113.1(g)(1)(i)(I).
---------------------------------------------------------------------------

    <bullet> New 11 CFR 113.1(g)(6)(ii), to limit the amount of 
compensation that a candidate could receive from campaign funds. The 
Commission proposed six alternative compensation caps, each of which 
would have enabled principal campaign committees to compensate

[[Page 8]]

candidates even if they had not earned income the year prior to 
becoming a candidate. The Commission is adopting a modified version of 
these proposals.
    <bullet> New 11 CFR 113.1(g)(6)(iii), to define ``compensation'' 
for purposes of the regulation. This definition does not currently 
appear in Commission regulations. The Commission proposed three 
alternative definitions, each of which would have defined compensation 
to include direct payments to the candidate and payments for at least 
some other employee-related benefits, such as health insurance premiums 
or dependent care costs. The Commission is adopting a modified version 
of these proposals.
    <bullet> New 11 CFR 113.1(g)(6)(iv), to require a candidate's 
committee to reduce the maximum amount of compensation that the 
candidate could receive from campaign funds by the amount of any earned 
income the candidate received while also receiving compensation from 
campaign funds. This provision would have revised a requirement already 
in the Commission's regulation.\37\ The Commission is adopting a 
modified version of this proposal.
---------------------------------------------------------------------------

    \37\ See id.
---------------------------------------------------------------------------

    <bullet> New 11 CFR 113.1(g)(6)(v), to establish the period during 
which a candidate would be eligible to receive compensation from 
campaign funds. This provision would have increased the length of the 
eligibility period already in Commission regulations.\38\ The 
Commission is adopting a modified version of this proposal.
---------------------------------------------------------------------------

    \38\ See id.
---------------------------------------------------------------------------

    <bullet> New 11 CFR 113.1(g)(6)(vi), to prohibit a candidate's 
principal campaign committee that seeks to settle debts for less than 
their full value from paying compensation to the candidate or 
satisfying a debt to the candidate for compensation, and to prohibit 
any debt settlement plan created under 11 CFR 116.7 from providing for 
the payment of compensation to the candidate before all other creditors 
are paid. These prohibitions do not currently appear in the 
Commission's regulations. The Commission is adopting a modified version 
of this proposal.
    <bullet> New 11 CFR 113.1(g)(6)(vii), to require a candidate who 
receives compensation from campaign funds to provide evidence of prior 
earned income upon the request of the Commission in certain 
circumstances, and to require a candidate to maintain and preserve such 
evidence for three years, pursuant to the Commission's regulations on 
the preservation of records. This provision would have revised a 
requirement currently appearing in the Commission's regulation.\39\ The 
Commission is adopting this proposal.
---------------------------------------------------------------------------

    \39\ See id.
---------------------------------------------------------------------------

G. Public Comments on the NPRM

    The Commission received 62 written comments in response to the 
NPRM. Ten comments were submitted by or on behalf of 15 organizations, 
3 were submitted by former candidates for federal office, and 49 were 
from other individuals.
    As explained further below, these comments unanimously supported 
some version of the Commission's proposals to permit principal campaign 
committees to compensate candidates who did not receive income in the 
year prior to becoming a candidate, although the comments varied widely 
in the alternatives they supported. These comments echoed the Petition 
and comments on the Petition in pointing out that the current 
regulation does not allow full-time caregivers, or those who have had a 
recent gap in employment, to receive compensation from campaign funds. 
The comments also supported allowing candidates to obtain compensation 
from campaign funds at the start of their campaigns. These comments 
cited, as did the Petitioner and comments on the Petition, the wide 
disparity among state ballot access deadlines and the demands that 
modern campaigns place on candidates as early as the start of their 
campaigns. The comments also supported allowing winning candidates to 
accept compensation from campaign funds until they are sworn into 
office; some comments additionally urged the Commission to extend the 
eligibility period for losing candidates by allowing them to continue 
accepting campaign funds for a short period after the end of their 
candidacies to wind down their campaign committees. The comments also 
generally agreed that a candidate's campaign committee should be able 
to use campaign funds to pay the candidate's health insurance premiums 
or dependent care costs.

H. Public Hearing

    On March 22, 2023, the Commission held a public hearing on 
Candidate Salaries. The Commission heard testimony from 11 witnesses, 
all but one of whom supported making changes to the Commission's 
regulations on candidate compensation. The witnesses included one 
Member of Congress, five former congressional candidates, a legal 
academic, and representatives from four organizations: a national labor 
organization, a national party committee, and two public interest 
organizations that advocate for campaign finance reform. After the 
hearing, four witnesses submitted additional information to the 
Commission.
    As explained further below, the Member of Congress and former 
congressional candidates testified to the hardships they faced in 
running for federal office, due to the limited time period that 
candidates are eligible to receive compensation from campaign funds 
under the current regulation. These witnesses also expressed support 
for many of the Commission's proposals. The legal academic and most of 
the witnesses representing organizations generally argued that the cap 
on candidate compensation should be untethered from previous earnings, 
that the date of eligibility should be moved to the start of candidacy, 
and that candidates should be able to receive benefits from campaign 
funds.
    One witness argued that the payment of any candidate compensation 
violates the Act's ``irrespective'' test because it allows candidates 
to pay indirectly for personal living expenses. The witness suggested 
that the Commission should either repeal the current regulation or not 
increase the ability of candidates to receive compensation under it.

II. Revised 11 CFR Part 113.1--Definitions

    Considering the issues raised in the Petition, public comments, and 
witness testimony,\40\ the Commission is amending its regulations 
regarding the use of campaign funds for compensation to candidates, as 
described below. The Commission has previously concluded that ``the 
payment of a salary to the candidate is not a prohibited personal use 
as defined under the Commission regulations since, but for the 
candidacy, the candidate would be paid a salary in exchange for 
services rendered to an employer.'' \41\ Nothing has occurred to change 
the Commission's conclusion in this regard. Instead, the Commission 
intends to revise its regulations to reflect more accurately the 
appropriate amount of campaign funds that may be used to ``compensate 
candidates for lost income that is forgone due to becoming a 
candidate.'' \42\
---------------------------------------------------------------------------

    \40\ For purposes of this document, ``comment'' applies to both 
written comments and supplemental information and oral testimony at 
the public hearing.
    \41\ 2002 Final Rule, 67 FR at 76972.
    \42\ Id.
---------------------------------------------------------------------------

    As proposed in the NPRM, the Commission is also reorganizing its

[[Page 9]]

current regulations at 11 CFR 113.1(g)(1) through (8) addressing 
personal use \43\ and adding new paragraph (g)(6) to address candidate 
compensation. This reorganization is being made for purposes of clarity 
and to accommodate the regulatory revisions set out in this Notice.
---------------------------------------------------------------------------

    \43\ Specifically, the Commission is removing and reserving 11 
CFR 113.1(g)(1)(i)(I); redesignating current paragraphs (g)(6), 
(g)(7), and (g)(8) as (g)(7), (g)(8), and (g)(9), respectively; and 
adding new paragraph (g)(6) to address candidate compensation.
---------------------------------------------------------------------------

A. New 11 CFR 113.1(g)(6)(i)--Federal Officeholders

    The Commission's current regulations prohibit a federal 
officeholder who is also a federal candidate from receiving a salary 
from campaign funds.\44\ The Commission explained that, in the absence 
of this prohibition, ``an incumbent officeholder would be receiving two 
salaries, one from his or her campaign and one for his or her official 
duties.'' \45\
---------------------------------------------------------------------------

    \44\ 11 CFR 113.1(g)(1)(i)(I). The term ``federal officeholder'' 
is defined at 11 CFR 113.1(c).
    \45\ 2002 Final Rule, 67 FR at 76972.
---------------------------------------------------------------------------

    In the NPRM, the Commission proposed to maintain this prohibition 
at 11 CFR 113.1(g)(6)(i) by providing that a federal officeholder may 
not receive compensation as a candidate from campaign funds. The 
Commission received no comments on this proposal. The Commission is 
maintaining this prohibition and moving it to new 11 CFR 
113.1(g)(6)(i).

B. New 11 CFR 113.1(g)(6)(ii)--Candidate Compensation Cap

    Under the current regulation, salary payments from campaign funds 
to a candidate are limited to the lesser of the minimum salary for the 
federal office that the candidate seeks, or the earned income that the 
candidate received during the year prior to becoming a candidate.\46\ 
Accordingly, candidates may receive salary payments from campaign funds 
only if they earned income the year prior to becoming a candidate.
---------------------------------------------------------------------------

    \46\ 11 CFR 113.1(g)(1)(i)(I).
---------------------------------------------------------------------------

    In the NPRM, the Commission proposed six alternatives (Proposed 
Compensation Cap Alternatives A through F) for revising the cap on the 
amount of compensation a candidate may receive from campaign funds. The 
Commission proposed these alternatives because, as indicated in the 
Petition and comments on the Petition, the current regulation does not 
adequately address ``income that is forgone due to becoming a 
candidate,'' \47\ especially by individuals who had a gap in employment 
or an unusually low level of income the year before becoming a 
candidate. The Commission sought comment on whether it should adopt any 
of the proposals or a combination of aspects of the proposals.
---------------------------------------------------------------------------

    \47\ NPRM, 87 FR at 75948 (quoting 2002 Final Rule, 67 FR at 
76972).
---------------------------------------------------------------------------

    For each alternative, the Commission proposed to require principal 
campaign committees to calculate the compensation and cap at the daily 
rate, rounded to the nearest dollar. Under this approach, the 
compensation and cap would be allocated based on the number of days per 
year that the candidate spent campaigning.
    In addition to comments on specific alternatives as described 
below, the comments supporting the NPRM's proposals agreed that the 
Commission should expand the pool of candidates eligible to receive 
compensation from campaign funds to include people who otherwise might 
be prevented from campaigning due to a lack of funds, such as students, 
caregivers, and those who lost jobs before becoming a candidate. 
Several comments also agreed that no candidate should be able to accept 
compensation from campaign funds exceeding the salary for the federal 
office sought by the candidate.
Proposed Alternatives A, B, and C
    Proposed Compensation Cap Alternatives A, B, and C did not consider 
a candidate's prior earned income in setting a cap on the amount of 
compensation the candidate could receive from campaign funds.
    Proposed Compensation Cap Alternative A (50% minimum officeholder 
salary approach) would have capped the amount of campaign funds that a 
candidate's principal campaign committee could use to pay compensation 
to the candidate at 50% of the minimum salary for the federal office 
sought. This cap would have applied to all candidates for the same 
office, regardless of the amount of income they earned the year before 
becoming a candidate. Five comments generally supported the approach 
taken in Alternative A, but differed as to whether the cap should be 
set at 50% or 100% of the salary for the office sought by the 
candidate.
    Proposed Compensation Cap Alternative B (hourly minimum wage 
approach) would have capped a candidate's compensation from campaign 
funds at the daily rate of the annualized hourly minimum wage. 
Annualized hourly minimum wage was defined as the amount an individual 
receiving the federal minimum wage would earn by working 40 hours a 
week for 52 weeks, except that an individual residing in a state with a 
higher minimum wage than the federal minimum wage could use the state 
minimum wage. Three comments opposed Alternative B, arguing that the 
annualized hourly minimum wage was too low to provide a living wage to 
candidates, not objectively justifiable, and neither compensated 
candidates for the services demanded by a modern campaign nor 
reasonably accounted for their opportunity costs incurred in running 
for office. No comments supported this alternative.
    Proposed Compensation Cap Alternative C ($15 per hour approach) 
would have capped candidate compensation based on the amount an 
individual receiving $15 per hour would earn by working 40 hours per 
week for 52 weeks--calculated at the daily rate--rather than the 
federal or state minimum wage. Three comments opposed Alternative C, 
arguing that this alternative was too low to provide a living wage to 
candidates, not objectively justifiable, and would neither compensate 
candidates for their services to a campaign nor reasonably account for 
their opportunity costs incurred in running for office. No comments 
supported this alternative.
Proposed Alternatives D, E, and F
    Proposed Compensation Cap Alternatives D, E, and F, like the 
current regulation, would have considered the candidate's previous 
earned income, but in different ways.
    Proposed Compensation Cap Alternative D (prior 12-month income 
approach) would have capped a candidate's compensation from campaign 
funds at the candidate's earned income in the 12-month period before 
becoming a candidate or the annualized hourly minimum wage, whichever 
was greater, but not to exceed the minimum annual salary for the office 
sought by the candidate. One comment supported Alternative D, because 
it would ensure that all candidates could receive at least the 
annualized minimum wage and enable candidates who had earned more 
during the relevant period to receive commensurately more compensation 
from campaign funds.
    Proposed Compensation Cap Alternative E (three-year income 
approach) would have enabled a candidate to receive compensation from 
campaign funds up to the average annual income that the candidate had 
earned during the most recent three calendar years in which the 
candidate earned income prior to becoming a candidate, capped by the 
salary for the office sought by the candidate. No comments supported 
this alternative.

[[Page 10]]

    Proposed Compensation Cap Alternative F (three-year income with 
minimum wage approach) would have been the same as Alternative E, while 
also offering candidate committees the option of paying candidates up 
to the annualized minimum wage if the minimum wage was greater than the 
candidate's prior average earned income. Two comments supported 
Alternative F with modifications and two comments opposed it.
Final Rule
    After considering the comments, the Commission is adopting a 
variation of Proposed Compensation Cap Alternative E. Under new 11 CFR 
113.1(g)(6)(ii), the use of campaign funds by a candidate's principal 
campaign committee to pay compensation to the candidate is not personal 
use, provided that the compensation does not exceed the lesser of 50% 
of the minimum annual salary paid to a Member of the U.S. House of 
Representatives (regardless of the specific office sought), and the 
average annual income that the candidate earned during the most recent 
five calendar years in which the candidate earned income prior to 
becoming a candidate. The new regulation requires the average annual 
income and 50% of the minimum House Member salary to be calculated at 
the daily rate, rounded to the nearest dollar.
    Example 1: Candidate A earned an average annual income of $35,000 
in the most recent five calendar years in which Candidate A earned 
income prior to becoming a candidate, which means the daily rate is $96 
for purposes of the compensation cap ($35,000/365, rounded to the 
nearest dollar). The minimum annual House Member salary is $174,000, 
which means the daily rate is $238 (($174,000 x 50%)/365, rounded to 
the nearest dollar). Under these facts, Candidate A's compensation is 
capped at $96 per day because the daily rate of the candidate's 5-year 
average earned income is less than the daily rate of 50% of the minimum 
House Member salary.
    Example 2: Candidate B earned an average annual income of $100,000 
in the most recent five calendar years in which Candidate B earned 
income prior to becoming a candidate, which means the daily rate is 
$274 ($100,000/365). The minimum annual House Member salary is 
$174,000, which means the daily rate is $238 (($174,000 x 50%)/365), 
rounded to the nearest dollar). Under these facts, Candidate B's 
compensation is capped at $238 per day because the daily rate of 50% of 
the minimum House Member salary is less than the daily rate of 
Candidate B's 5-year average earned income.
    Example 3: Candidate C becomes a candidate in 2023. Candidate C 
earned income averaging $60,000 per year in 2021, 2019, 2018, 2017, and 
2016, but did not earn any income in 2022 or 2020. Because Candidate 
C's 5-year average earned income in the five most recent calendar years 
in which Candidate C earned income was $60,000, which is less than 50% 
of the minimum House Member salary of $174,000 in 2023, Candidate C 
would be entitled to receive $164 per day ($60,000/365) in compensation 
from campaign funds in 2023.
    Like Proposed Compensation Cap Alternative E and the current 
regulation, the revised compensation cap allows a candidate's principal 
campaign committee to use campaign funds to pay the candidate 
compensation up to the lesser of the candidate's pre-candidacy earned 
income and a percentage of the minimum annual salary paid to a federal 
officeholder. The revised cap, however, allows the principal campaign 
committee to consider the candidate's prior earned income over a period 
of five years, instead of three years as proposed in the NPRM and one 
year as in the current regulation. The Commission intends this longer 
look-back to provide a more realistic estimate of the income a 
candidate forgoes in running for office; averaging income earned over a 
longer period is intended to moderate any aberrations in the 
candidate's prior annual earnings.
    The Commission's revised regulation also differs from Proposed 
Compensation Cap Alternative E and the Commission's current regulation 
in that it places an upper-level cap at 50% of the minimum annual 
salary paid to a Member of the U.S. House of Representatives, rather 
than 100% of the minimum annual salary paid to a federal officeholder 
holding the office that the candidate seeks. These changes are intended 
to better reflect substantial differences between running for federal 
office and holding federal office, especially in a higher-level 
position such as the presidency or a leadership position in Congress. 
Officeholders have significant duties under the Constitution, and their 
salaries are set by the political branches subject to Constitutional 
restraints.\48\ Officeholders must continue to execute the duties of 
their offices while campaigning and they accordingly receive their full 
salaries while campaigning. Candidates who do not hold office may also 
choose to continue their employment while running for office, but 
should they decide otherwise and prefer to campaign full-time, the 
Commission notes that half of the minimum congressional salary exceeds 
the current median household income in the United States.\49\ Limiting 
candidate compensation in this way helps protect against personal 
enrichment from one's candidacy and is tailored to real financial need. 
Moreover, the record before the Commission does not establish the need 
for salaries exceeding this amount, with near-universal agreement in 
comments that changes to the Commission's regulations were needed to 
allow individuals of modest means to run for office.
---------------------------------------------------------------------------

    \48\ See U.S. Const. amend. XXVII.
    \49\ In 2022, half of the annual salary for Members of the House 
of Representatives under 2 U.S.C. 4501(1)(A) was $87,000, while the 
real median household income was $74,580. Income in the United 
States: 2022, United States Census Bureau, Sept. 12, 2023, https://www.census.gov/library/publications/2023/demo/p60-279.html.
---------------------------------------------------------------------------

    The Commission is not adopting the other alternative cap proposals 
presented in the NPRM or comments. Although several comments presented 
policy arguments in favor of the other proposals (such as the 
desirability of providing a fair living wage, enhancing the diversity 
of candidates, and reducing bias that favors incumbents), these 
proposals would have enabled candidates to receive an amount of 
compensation from campaign funds that was divorced from the candidate's 
prior earnings history, and therefore did not reflect the candidate's 
demonstrated earning potential and income forgone by running for 
office. As the Commission has stated previously, the payment of 
campaign funds to a candidate is not personal use when it 
``compensate[s] candidates for lost income that is forgone due to 
becoming a candidate.'' \50\
---------------------------------------------------------------------------

    \50\ 2002 Final Rule, 67 FR at 76972.
---------------------------------------------------------------------------

    In the Commission's view, a candidate's earned income history over 
the most recent five years that the candidate earned income, capped by 
50% of the minimum House Member salary, provides a better picture of 
the income forgone by a candidate running for office.

C. New 11 CFR 113.1(g)(6)(iii)--Definition of ``Compensation''

    As explained above, the Act does not specifically address 
compensation to candidates in its provisions on the personal use of 
campaign funds. While the Commission's current regulations permit the 
use of campaign funds to pay a ``salary'' to a candidate in certain 
circumstances, the regulations do not define ``salary'' or explicitly 
address the use of campaign funds to pay such

[[Page 11]]

employment-related benefits as health insurance premiums or dependent 
care costs. Nor do the Commission's current regulations define 
``compensation'' in this context.
    In the NPRM, the Commission proposed three alternative definitions 
of ``compensation,'' each of which included ``direct payments to the 
candidate,'' as well as payments for at least some other employment-
related benefits. Several comments on the NPRM generally supported 
these proposals. One comment was concerned that the proposed 
definitions could be read to encompass payments to candidates for non-
compensation purposes, such as campaign expense reimbursements and loan 
repayments.
    The Commission agrees with this concern. The term ``compensation'' 
is intended to include only payments to a candidate to make up for 
salary forgone by becoming a candidate and is not intended to make 
otherwise permissible payments, such as candidate expense 
reimbursements and candidate loan repayments, subject to the 
compensation cap. Accordingly, new 11 CFR 113.1(g)(6)(iii) defines 
``compensation'' as ``direct payments to the candidate unless the 
payments are otherwise permitted by law, such as candidate expense 
reimbursements and candidate loan repayments under 11 CFR part 116.''
    The Commission is not addressing the payment of a candidate's 
health insurance premiums and dependent care costs in these final 
rules. Although several comments supported including payments for these 
benefits in the definition of ``compensation,'' arguing that such 
benefits are inextricably linked to employment and requiring candidates 
to forgo those benefits while campaigning could prevent some 
individuals from running for federal office, the advisory opinion 
process is better suited to addressing this use of campaign funds. 
Determining whether an impermissible conversion of campaign funds to 
personal use would result from a campaign committee's payment of a 
candidate's health insurance premiums or dependent care costs is a 
fact-specific inquiry.\51\ Accordingly, the Commission has decided to 
continue its current practice of addressing this issue on a case-by-
case basis through the advisory opinion process.\52\ The Commission's 
advisory opinions addressing the use of campaign funds to pay a 
candidate's or officeholder's dependent care costs remain in effect. 
Any person whose factual circumstances differ materially from those 
described in these advisory opinions may request an advisory opinion.
---------------------------------------------------------------------------

    \51\ For example, in Advisory Opinion 2022-07 (Swalwell), the 
Commission concluded that an officeholder could use campaign funds 
to pay overnight childcare expenses that he incurred when traveling 
for his own campaign but did not approve a response to the question 
whether the officeholder could use campaign funds to pay childcare 
expenses incurred when he campaigned for others. In Advisory Opinion 
2019-13 (MJ for Texas), the Commission concluded that a candidate 
who left her job to work full-time on her campaign could use 
campaign funds to pay for full-time daycare for her children, where 
she would spend the ``vast majority'' of her time away from her 
family on campaign activities and would reimburse the campaign for 
childcare costs incurred when not campaigning. In Advisory Opinion 
2018-06 (Liuba for Congress), the Commission concluded that a 
candidate who had given up her in-home consulting work to campaign 
and hired a caregiver for her children could use campaign funds to 
pay childcare expenses when her campaign responsibilities prevented 
her from caring for the children herself.
    \52\ See, e.g., Advisory Opinion 2022-07 (Swalwell) at 4 
(approving use of campaign funds to pay candidate's childcare 
expenses to extent expenses are the ``direct result of campaign 
activity''); Advisory Opinion 2019-13 (MJ for Texas) at 3 (same); 
Advisory Opinion 2018-07 (Liuba for Congress) at 3 (same); see also 
Advisory Opinion 1995-42 (McCrery) at 2 (approving use of campaign 
funds to pay childcare expenses when Congressman and spouse attend 
campaign events, where expenses result only from campaign activity 
and otherwise would not exist).
---------------------------------------------------------------------------

D. New 11 CFR 113.1(g)(6)(iv)--Outside Earned Income

    As noted above, the Commission's current regulation caps the amount 
of campaign funds that a candidate may receive in salary from the 
candidate's principal campaign committee at either (1) the amount of 
income earned by the candidate in the 12-month period immediately 
preceding candidacy, or (2) the minimum annual salary for the federal 
office that the candidate seeks, whichever amount is lower. For 
purposes of this calculation, the current regulation further requires 
the minimum salary of the office that the candidate seeks to be reduced 
by the amount of any earned income that the candidate receives from 
salaries or wages from any source other than the candidate's principal 
campaign committee.\53\ The Commission has explained that it requires 
campaign committees to count any outside earned income received by a 
candidate against the officeholder salary limit to ``prevent candidates 
from paying themselves a salary from campaign funds on top of other 
earned income that they receive from other sources, such as from 
private sector employment, to the extent that such combined payments 
exceed the minimum annual salary for the Federal office that the 
candidate is seeking.'' \54\ The current regulation does not, however, 
require a campaign committee to count outside income earned by a 
candidate against the limit set by the amount of pre-candidacy income 
earned by a candidate.
---------------------------------------------------------------------------

    \53\ 11 CFR 113.1(g)(1)(i)(I).
    \54\ 2002 Final Rule, 67 FR at 76972.
---------------------------------------------------------------------------

    In the NPRM, the Commission proposed new 11 CFR 113.1(g)(6)(iv) to 
rectify the apparent imbalance in the salary cap reduction by requiring 
the amount earned by a candidate from other sources to count against 
the maximum amount of compensation that a candidate can receive from 
campaign funds, rather than counting against only the minimum annual 
salary for the office sought by the candidate. Although these final 
rules incorporate a standard tied to the minimum House Member salary 
even if the candidate is not seeking that office, the NPRM's proposal 
regarding the reduction for outside earned income remains otherwise 
unchanged.
    Three comments supported the proposed regulation. They indicated 
that it would enhance oversight of candidates receiving compensation 
from campaign funds and was particularly apt considering the 
Commission's proposed expansion of candidates' ability to accept 
compensation from campaign funds and the period during which they may 
do so. No comment opposed the proposal.
    The Commission agrees that earned income a candidate receives from 
non-campaign sources should count against the maximum amount of 
compensation that the candidate can receive from campaign funds. If a 
candidate earns income from outside sources while campaigning for 
federal office, that income has not been lost to campaigning, and the 
Commission discerns no reason for treating outside earned income 
differently based on whether the applicable compensation cap is set by 
the candidate's pre-candidacy earned income or the minimum House Member 
salary. Therefore, the Commission is adopting the proposal at new 11 
CFR 113.1(g)(6)(iv) to require a candidate's principal campaign 
committee to reduce the maximum amount of permissible candidate 
compensation from campaign funds by the amount of income earned by the 
candidate from other sources after the candidate files a Statement of 
Candidacy.\55\
---------------------------------------------------------------------------

    \55\ The final rule differs from the proposed rule in one 
additional respect. The proposed rule would have reduced the maximum 
amount of compensation that a candidate could receive from campaign 
funds if the candidate earned income from outside sources ``while 
the candidate receives compensation from campaign funds.'' In 
response to a comment, the final rule provides, instead, that the 
maximum amount of compensation a candidate can receive from campaign 
funds must be reduced if the candidate earns income from outside 
sources ``after the candidate files a Statement of Candidacy under 
11 CFR 101.3(a).'' This revision is intended to avoid the impression 
that the compensation cap will be affected only if the candidate 
earns income from outside sources simultaneously with the receipt of 
compensation from campaign funds.

---------------------------------------------------------------------------

[[Page 12]]

    Example 1: Candidate A earned an annual average of $60,000 during 
the most recent five calendar years in which Candidate A earned income 
before becoming a candidate, and the minimum House Member salary is 
$174,000 per year. Because $60,000 is less than half of the minimum 
House Member salary ($87,000), Candidate A could receive up to $164/day 
($60,000/365). But, if Candidate A earns $30,000 in income from outside 
sources after filing a Statement of Candidacy with the Commission, the 
maximum amount that Candidate A may receive as compensation from 
campaign funds must be reduced by $30,000, meaning that the total 
compensation paid to the candidate may not exceed $82/day (($60,000-
$30,000)/365).
    Example 2: Candidate B earned an annual average of $100,000 during 
the most recent five calendar years in which Candidate B earned income 
before becoming a candidate, and the minimum annual House Member salary 
is $174,000 per year. Because half of the Minimum Officeholder Salary 
($87,000) is less than $100,000, Candidate B could receive up to $238/
day. But, if Candidate B earns $30,000 in income from outside sources 
while also receiving compensation from campaign funds, the maximum 
amount that Candidate B may receive as compensation from campaign funds 
must be reduced by $30,000, meaning that the total compensation paid to 
the candidate may not exceed $156/day (($87,000-$30,000)/365).

E. New 11 CFR 113.1(g)(6)(v)--Eligibility Period

    The Commission's current regulation prohibits the use of campaign 
funds to pay a candidate's salary before the filing deadline for access 
to the primary election ballot for the federal office that the 
candidate seeks, as determined by state law, or January 1 of each even-
numbered year in states that do not conduct primaries.\56\
---------------------------------------------------------------------------

    \56\ 11 CFR 113.1(g)(1)(i)(I).
---------------------------------------------------------------------------

    In the NPRM, the Commission proposed to allow candidates to begin 
receiving compensation from campaign funds on the date the candidate's 
principal campaign committee files a Statement of Organization with the 
Commission, regardless of when the candidate is required to file for 
ballot access under state law. This proposal was intended to reflect 
more accurately when a candidate may start to forgo salary because of 
the campaign, and to apply uniform criteria for when candidates' 
principal campaign committees may start using campaign funds to 
compensate the candidate.
    The comments generally supported this proposal. Echoing the 
Petition, several comments argued that ballot access deadlines are an 
inaccurate means of determining when a candidate begins losing income 
due to campaigning, and the lack of uniformity in state ballot access 
deadlines militates against using those deadlines to trigger 
candidates' eligibility to receive compensation from campaign funds. 
The comments largely agreed with the Commission's proposal to allow 
candidates to begin drawing compensation from campaign funds on the 
date that their principal campaign committee files a Statement of 
Organization with the Commission, but two comments suggested that the 
eligibility period should begin when the candidate files the Statement 
of Candidacy.
    The Commission is adopting new 11 CFR 113.1(g)(6)(v) to allow 
candidates to begin receiving compensation from campaign funds on the 
date they file their Statement of Candidacy, rather than on the date of 
the state's filing deadline for ballot access as under the current 
regulation or when a principal campaign committee files a Statement of 
Organization with the Commission as proposed. The comments indicate 
that campaigns often start well before the state's filing deadline for 
ballot access under state law. Moreover, under the Act and Commission 
regulations, each candidate must file a new Statement of Candidacy with 
the Commission for each election in which the candidate runs for 
office, but a principal campaign committee is not required to file a 
new Statement of Organization for each election. The Statement of 
Candidacy is the first document that a campaign must file with the 
Commission.\57\ Therefore, the Commission has determined that the 
filing of a Statement of Candidacy will serve as a more accurate 
standard than the state's deadline for filing for ballot access or a 
Statement of Organization for determining when a campaign begins and 
when a candidate becomes eligible to receive compensation from campaign 
funds in each election. Moreover, the new regulation will help promote 
uniformity in determining the start of the eligibility period.\58\
---------------------------------------------------------------------------

    \57\ A candidate must file a Statement of Candidacy within 15 
days after becoming a candidate, 11 CFR 101(a), and a principal 
campaign committee must file a Statement of Organization within 10 
days after the candidate's Statement of Candidacy, 11 CFR 102.1(a).
    \58\ The final rules differ from the proposed rules in one 
additional respect. In the NPRM, the Commission proposed to provide 
that, in the case of a special election, a candidate's principal 
campaign committee could pay the candidate compensation starting on 
the date the special election is set. The Commission received no 
comments on this proposal and as noted above, received ample 
comments supporting the notion that a candidate should be eligible 
to receive compensation upon filing a Statement of Candidacy. The 
Commission discerns no reason to differentiate special elections 
from other types of elections in this respect. Therefore, under 
these final rules, candidates, whether in special elections or 
regularly scheduled elections, may begin receiving compensation from 
campaign funds upon filing their Statement of Candidacy with the 
Commission.
---------------------------------------------------------------------------

    The current regulation prohibits the use of campaign funds to pay a 
candidate's salary after the date the candidate loses the primary 
election, withdraws from the race, or otherwise ceases to be a 
candidate or, if the candidate wins the primary, after the date of the 
general election or general election runoff.\59\ For special elections 
occurring in odd-numbered years, the eligibility period runs until the 
date of the special election.
---------------------------------------------------------------------------

    \59\ 11 CFR 113.1(g)(1)(i)(I).
---------------------------------------------------------------------------

    In the NPRM, the Commission proposed to extend the eligibility 
period for candidates who win the general election, general election 
runoff, special election, or special election runoff by allowing them 
to continue receiving compensation from campaign funds up to the date 
they are sworn into office, rather than on the date of the election as 
under the current regulation. For losing candidates and any other 
individual who ceases to be a candidate, such as by withdrawing from 
the race, the Commission proposed to continue the approach under the 
current regulation and prohibit compensation from being paid beyond the 
date of losing the election or otherwise ceasing to be a candidate.\60\
---------------------------------------------------------------------------

    \60\ Id.
---------------------------------------------------------------------------

    Many of the comments supported the Commission's proposal to permit 
winning candidates to receive compensation from campaign funds up to 
the date they are sworn into office, rather than the date of the 
election, and two suggested lengthening the period for losing 
candidates as well. One comment argued that losing candidates should be 
permitted to receive compensation for a reasonable period, such as 60 
days after the election, and another organization suggested 1 or 2

[[Page 13]]

months, so that the candidates may wind down their campaigns.
    The Commission is adopting new 11 CFR 113.1(g)(6)(B) to enable all 
candidates to accept compensation from campaign funds for 20 calendar 
days after winning or losing the election or otherwise ceasing to 
become a candidate. As the comments pointed out, all candidates must 
spend time after a campaign winding down their campaigns, and a 20-day 
period reflects the timelines of reportable activity for post-general 
election reports.\61\ The Commission is extending the same rationale to 
candidates who lose primary elections or otherwise drop out of the race 
to maintain consistency between candidates who do and do not advance to 
the general election.
---------------------------------------------------------------------------

    \61\ See id. 104.5(a)(2)(ii)(B).
---------------------------------------------------------------------------

F. New 11 CFR 113.1(g)(6)(vi)--Debts and Debt Settlement

    To prevent candidates from enriching themselves at the expense of 
other campaign creditors, the Commission proposed in the NPRM to 
prohibit any principal campaign committee seeking to settle debts for 
less than full value from paying compensation to the candidate or 
satisfying a debt to the candidate for compensation. In addition, under 
the proposal, any debt settlement plan created under 11 CFR 116.7 would 
be prohibited from providing for the payment of compensation to the 
candidate before all other creditors are paid.
    The Commission received two comments supporting this proposal, at 
least in part. One comment said the proposed revision is necessary for 
sufficient oversight of candidates receiving compensation from campaign 
funds. The other agreed that a principal campaign committee's debt to a 
candidate for compensation should be subordinated to debts owed to the 
committee's other creditors in any debt settlement plan, but suggested 
that committees seeking to settle debts for less than the full value 
should also be permitted to settle a debt for compensation with the 
candidate.
    The Commission does not agree with the latter comment's suggestion. 
New 11 CFR 113.1(g)(6)(vi) is intended to prevent a principal campaign 
committee from paying compensation to a candidate at the expense of the 
committee's other creditors. When a principal campaign committee seeks 
to settle debts for less than the full amount owed, any campaign funds 
that the committee pays to the candidate for compensation are funds 
that could have been, but are not being, paid to help make other 
creditors whole. Accordingly, new 11 CFR 113.1(g)(6)(vi) prohibits a 
principal campaign committee from settling or satisfying a debt for 
compensation to the candidate, or otherwise paying compensation to the 
candidate, when seeking to settle debts to others for less than the 
full amount owed.

G. New 11 CFR 113.1(g)(6)(vii)--Evidence of Earned Income

    The Commission's current regulations require any candidate 
receiving a salary from campaign funds to provide income tax records 
and other evidence of earned income upon request of the Commission.\62\ 
In the NPRM, the Commission proposed in Proposed Compensation Cap 
Alternatives D, E, and F to maintain this requirement at new 11 CFR 
113.1(g)(6)(vii). The Commission received one comment supporting the 
proposal as necessary for sufficient oversight of candidates receiving 
compensation from campaign funds. The Commission agrees. Because income 
earned by a candidate during certain time periods is a material 
consideration in determining the maximum compensation that the 
candidate may receive from campaign funds, new 11 CFR 113.1(g)(6)(vii) 
maintains the current requirement that candidates who receive 
compensation from campaign funds must provide income tax records or 
other evidence of earned income upon request of the Commission.
---------------------------------------------------------------------------

    \62\ Id. 113.1(g)(1)(i)(I).
---------------------------------------------------------------------------

    The Commission is also adopting a proposal from the NPRM to require 
candidates to maintain and preserve evidence of earned income for three 
years after their principal campaign committees file reports disclosing 
the payment of compensation to the candidates, pursuant to 11 CFR 102.9 
and 104.14(b). The Commission received no comments on this proposal. 
Sections 102.9 and 104.14(b) already require political committees and 
their authorized agents to keep certain records of committee 
disbursements \63\ and to maintain those records for three years after 
filing a report to which such records relate.\64\ New 11 CFR 
113.1(g)(6)(vii) clarifies that this record retention requirement 
applies to evidence of a candidate's earned income, as well.
---------------------------------------------------------------------------

    \63\ Id. 102.9(b). Such records include bank records, vouchers, 
worksheets, receipts, bills, and accounts. Id. 104.14(b)(1).
    \64\ Id. 102.9(c).
---------------------------------------------------------------------------

Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory 
Flexibility Act)

    The Commission certifies that the final rules do not have a 
significant economic impact on a substantial number of small entities. 
The final rules provide flexibility to principal campaign committees 
that choose to use campaign funds to pay their candidates compensation. 
Any final rule that could be construed as placing an obligation on a 
principal campaign committee would apply only to campaigns that choose 
to pay their candidates compensation. The final rules would not impose 
any new recordkeeping, reporting, or financial obligations on principal 
campaign committees that do not choose to pay their candidates 
compensation, and any such new obligations that are imposed on 
principal campaign committees that do choose to pay compensation to 
their candidates would be minimal. Thus, to the extent that any 
entities affected by these final rules might fall within the definition 
of ``small businesses'' or ``small organizations,'' the economic impact 
of complying with these rules is not significant.

List of Subjects in 11 CFR Part 113

    Campaign funds.

    For the reasons set out in the preamble, the Federal Election 
Commission amends 11 CFR chapter 1 as follows:

PART 113--PERMITTED AND PROHIBITED USES OF CAMPAIGN ACCOUNTS

0
1. The authority citation for part 113 continues to read as follows:

    Authority:  52 U.S.C. 30102(h), 30111(a)(8), 30114, and 30116.


Sec.  113.1   [Amended]

0
2. In Sec.  113.1:
0
a. Remove and reserve paragraph (g)(1)(i)(I);
0
b. Redesignate paragraphs (g)(6) through (g)(8) as paragraphs (g)(7) 
through (g)(9);
0
c. Add new paragraph (g)(6).
    The addition reads as follows:
    (6) Candidate compensation. (i) A Federal officeholder, as defined 
in paragraph (c) of this section, must not receive compensation as a 
candidate from campaign funds.
    (ii) The use of campaign funds by a candidate's principal campaign 
committee to pay compensation to the candidate is not personal use, 
provided that the compensation does not exceed the lesser of: 50% of 
the minimum annual salary paid to a Member of the

[[Page 14]]

United States House of Representatives under 2 U.S.C. 4501, and the 
average annual income that the candidate earned during the most recent 
five calendar years in which the candidate earned income prior to 
becoming a candidate. The committee must calculate compensation, 
minimum annual salary, and average annual income at the daily rate, 
rounded to the nearest dollar.
    (iii) For the purposes of this paragraph, compensation means direct 
payments to the candidate unless the payments are otherwise permitted 
by law, such as candidate expense reimbursements and candidate loan 
repayments under 11 CFR part 116.
    (iv) The candidate's principal campaign committee must reduce the 
maximum amount of candidate compensation permissible under this 
paragraph (g)(6) by the amount of any earned income the candidate 
receives from any other source after filing a Statement of Candidacy 
under 11 CFR 101.1(a).
    (v)(A) Compensation shall not accrue or be paid to a candidate 
before the date the candidate files a Statement of Candidacy with the 
Commission. See 11 CFR 101.1(a).
    (B) A candidate's principal campaign committee may pay the 
candidate compensation from campaign funds up to 20 days after the 
candidate wins the general election, general election runoff, special 
election, or special election runoff, or otherwise ceases to be a 
candidate, such as by losing an election or withdrawing from the race.
    (vi) Any principal campaign committee seeking to settle debts for 
less than the full value may not pay compensation to the candidate or 
settle or satisfy a debt to a candidate for compensation.
    (vii) The candidate must provide evidence of earned income from the 
relevant years upon the request of the Commission. Any such evidence of 
earned income must be maintained and preserved for three years after 
the report disclosing the disbursement is filed, pursuant to 11 CFR 
102.9 and 104.14(b).

    Dated: December 14, 2023.

    On behalf of the Commission,
Dara S. Lindenbaum,
Chair, Federal Election Commission.
[FR Doc. 2023-27906 Filed 12-29-23; 8:45 am]
BILLING CODE 6715-01-P